Biden Administration to Avoid a 2024 Recession

President Joe Biden's administration appears on track to avoid an economic recession in 2024, new data shows.

Despite fears of an economic downturn, new data from Bank of America's (BofA) Global Research division points towards a resilient U.S. economy, calling 2024 'The Year of the Landing.' The BofA report forecasts a soft landing rather than a recession over the next year. The research comes amid a backdrop of global economic challenges and the Federal Reserve's strategic moves to manage inflation.

The past year "defined almost everyone's expectations," Candace Browning, head of BofA Global Research, shared in a statement including "recessions that never came."

Newsweek reached out to Bank of America via email for comment.

The optimistic outlook aligns with President Biden's economic strategy, as he mounts a reelection campaign. Biden, reflecting on the positive trends in October, said he never expected the Fed's aggressive rate hikes over the last year and a half to trigger a downturn, saying, "I never believed we would need a recession to bring inflation down."

Rate Cuts May Be Coming

Bank of America said it expects inflation to gradually move lower globally, allowing many central banks to cut rates in the second half of 2024 and avoid a global recession. Michael Gapen, BofA's head of U.S. economics, said he anticipates the Federal Reserve will cut rates by 0.25 percent per quarter in 2024 with the first one coming in June.

With a series of rate hikes since March 2022 aimed at curbing inflation, economic data suggests the central bank will change that strategy. The change is boosted by recent economic data indicating a slowdown in inflation, suggesting that the aggressive rate increases may have achieved their intended effect.

Ryan Detrick, chief market strategist at Carson Group, has been on the side of no recession for some time, saying in November that while there has been a spike in credit delinquencies, it can be seen as an economy that is normalizing to pre-pandemic norms rather than a harbinger of recession.

"Incomes are growing faster than inflation," Detrick told Fox Business. "Real incomes, real disposable incomes are drastically higher the last couple years." The market strategist explained that the average consumer is still in decent shape, saying that economic cracks like the spike in delinquencies is "just more normalizing."

No Recession for a Pre-Election Year

Detrick's analysis dovetails with history. He pointed out to Newsweek that the U.S. economy hasn't seen a recession in a pre-election year going back to World War II. "[we believe] there's no recession coming," he said.

With no recession, Bank of America said it sees the potential for upside in stocks, with the broad market S&P 500 potentially reaching an all-time high of 5000 by the end of 2024. The bank's bullish stance on stocks is based on the anticipated rate cuts, and on the adaptations and resilience shown by corporates amid changing economic conditions.

However, it is the potential of a recession itself that is causing the potential Fed pivot, according to Larry Hatheway, former chief economist of UBS. Hatheway said in a November op-ed published in Barron's that the Fed is likely slow to pivot and address recession risks due to inflation still being above its desired range.

That potential delay in response, coupled with political and fiscal constraints, could lead to a deeper and more prolonged economic downturn, if there is one, Hatheway said.

Should a recession materialize in 2024, the former chief economist said the impact on employment, the stock market and the political landscape could be substantial.

Still, economists at Bank of America believe that next year will be "the year when central banks can successfully orchestrate a soft landing."